The Year of the Few (Again)
2023 is turning out to be the year of the few. As I write this, the S&P 500 is in its largest drawdown since the October bottom last year. But what's most striking is how few stocks have contributed to returns this year.
Jim Bianco shared additional data documenting how just 7 stocks in the S&P 500 have contributed to the positive year-to-date returns. The other 493 stocks in the index have done virtually nothing. Same for mid-cap and small- cap indexes.
Whether it's managing your own company stock, or being a weekend warrior buying and selling individual stocks, take this research into consideration. From 1990-2023, just 2.4% of all global stocks made up 100% of the gains. This is not a small sample size of stocks (65,000 of them) nor a small sample size of time (30 + years.)
It turns out that 2023 isn't so rare, after all. Stock picking is hard. Fortunately, owning the index ensures you have exposure to those winners without any need to know which one's they'll be in advance.
Many thanks to DataTrek's Nick Colas for the detailed insight.
